Bitcoin is the world’s first cryptocurrency based on blockchain technology, so far this is the most valuable and widely known decentralized digital asset. It offers the easiest way to make transactions like buying goods and services, paying back to friends and family, and even transacting information like text and images by inscribing them into Bitcoin ordinals where the owner has full control over the asset and its security.
Cryptocurrencies like Bitcoin have no border and can be used everywhere anytime with a protected identity. Since its inception in January 2009, Bitcoin has been dominating the cryptocurrency world with continuous upgrades and improvement through innovation.
Many changes, improvements and innovations have been made over the period since its inception to make Bitcoin the best cryptocurrency among around 19,000 of its nature.
5 Bitcoin Innovations You Should Know About
Bitcoin innovation reflects the development of technology and novel protocols in the Bitcoin ecosystem. The developments range from newly standardized tokens, smart contracts, and better privacy protocols to a smoother and more efficient transaction process. Some innovations worth mentioning are Bitcoin Ordinal NFTs, BRC-69 Standard, Discrete Log Contracts (DLCs), Lightning Network, Taproot, Schonorr Signatures, etc.
Innovations come with additional benefits and better user experience. Bitcoin innovations are offering more security and efficiency to the users and a competitive edge for Bitcoin to remain the leader in the cryptocurrency world and have long-term visibility. From many, below are 5 Bitcoin Innovations You Should Know About –
Lightning Network is a layer-two payment protocol introduced to address scalability issues like speed and cost of making Bitcoin transactions. In comparison with traditional payment processors, Bitcoin’s maximum TPS (Transaction Per Second) is significantly low. Where traditional payment platforms cover around six thousand TPS on average, it’s only 10 maximum for Bitcoin. Also, the Bitcoin transaction fee is not fixed, it varies based on the demand of the network.
To enhance the speed and limit cost, a payment channel between two parties is made by Lightning Network that puts only the first and last transactions on the Bitcoin blockchain and gets the rest of the transactions between first and last on off-chain and eliminates the transaction limit of Bitcoin protocol. This effective method is free of cost and resultantly lowers the cost of Bitcoin transactions.
One of the latest upgrades of Bitcoin is Taproot which was released in November 2021 and has various powerful functionalities like batching multiple signatures and transactions together. With this upgrade, it becomes highly difficult to identify transaction inputs on Bitcoin’s blockchain, distinguishing participants also becomes harder. To facilitate future upgrades of the Bitcoin blockchain, Taproot includes an enhanced Transaction Programming Language called transcript utilizing Schnorr and Taproot technology.
A digital signature is a mathematical scheme that is used to check if a message was sent by a particular sender (authenticity) and if the message has not been altered (integrity) in between.
The Schnorr signature is a digital signature produced by the Schnorr signature algorithm which is well known for its simplicity, provable security, and linearity. This digital signature is very efficient and can generate short signatures with less computation than the Elliptic Curve Digital Signature Algorithm (ECDSA). Its security is based on the intractability of certain discrete logarithm problems which is the first of its kind.
The Schnorr Signature made Bitcoin transactions more secure by aggregating multiple signatures into a single signature.
Bitcoin Ordinal NFTs
Also known as Bitcoin Ordinals and Bitcoin NFTs, these are “sats” or satoshis (the smallest unit of bitcoin contains 0.00000001 BTC as value) created on the Bitcoin blockchain which are inscribed with information like text or pictures. This is a protocol that allows sats to have a unique identifier and transact additional data.
In most other blockchains, metadata of NFTs is stored off-chain but Bitcoin Ordinal NFTs allow the digital assets to be stored on-chain that ensures protection of intellectual property and a greater utility. People usually wonder how to buy ordinals even though it is a relatively easy process, as long as you know an ordinals marketplace and have an ordinals wallet.
Discrete Log Contracts (DLCs)
To provide a private, efficient, and secure oracle-based contract, Discrete Log Contracts (DLSc) comes with a contract protocol that facilitates conditional payment and allows users to exchange money based on the outcome of an event without the oracle knowing the terms of the contract. This comes with greater privacy as the contract is discreet, on the Bitcoin blockchain and no external observer can learn about the terms of the contract in a transaction from the public ledger.
The Bitcoin innovations described above will definitely play a pivotal role in shaping the future of Bitcoin and technology. This evolution is continuous and the drive for improved functionality, enhanced efficiency, increased security, and expanded use cases will remain active to make Bitcoin widely accepted and the medium of future finance.